October Market Update

Recent weeks have seen markets sell off after several years of strong returns and low volatility. 

We have been discussing the likelihood of a correction for some time now as markets have enjoyed a long stretch of growth with little downside.  While we continue to position our portfolios defensively and will aim to take advantage of a sell off, portfolios will still experience some form of volatility through this period if they have any market exposure.

The current volatility is being attributed to various issues, from rising US interest rates, stretched valuations or trade tensions between China and the US.  However, in some part the correction could also simply be part of a normal and healthy market cycle (albeit unpleasant) and for many investors will be viewed as a buying opportunity.

At this stage, from a ‘big picture’ point of view, the story is quite different to the events leading up to the Global Financial Crisis a decade ago.  Currently, developed economies are quite healthy with unemployment low and inflation in check.  While debt levels are still high, they do not seem as excessive as they were heading into the GFC so it’s unlikely that the current events would see a repeat of the GFC. 

During periods such as this, it is important to reassess your short, medium and long term goals, reassess your appetite for risk and your investment objectives.  For long term investors, this is a normal part of the cycle with growth assets and is to be expected.  However, if current events do not sit well with you then we would encourage you to get in touch so that we can have a further discussion and review your situation.

Regards,

Lisa & Doug